Unfair Equity Release Cost?

rugiada74

Hi, I am 8-9 months away from the 5 year IVA Term which commenced March 2013. My original debt was £35k and I am up to date with payments which have been £256 per month. My IVA company have now referred me to a 3rd Party (The Select Partnership) in order to see if I can release equity from my property.
After I have provided the necessary information Select are suggesting I take a £12k loan (or mortgage top up - is not clear) to close my IVA.
The interest rate is 11.9% over 23 years (yes 23!), £128 per month so meaning for a £12k loan I would need to repay in total a whopping £35k over the term!
This is of course if I take the loan to term but still it seems extremely unfair with all the future uncertainties of job, health etc....
In addition my terms say nothing of a 3rd party involvement. My terms state 'I [myself] will obtain 2 mortgage quotations from reputable brokers and/or mortgage lenders. If my supervisor is satisfied that one of these quotations demonstrates that I am seeking to re-mortgage for the maximum achievable then I will accept and proceed with a re-mortgage in line with the higher of these quotations.'
Any advice and help gratefully received.

DorisTrousers

You need to establish whether this is a protocol compliant IVA, which it probably will be.

The £128 is the maximum repayment per month, so that looks correct, however your ace in the hole could be that any equity release product cannot take you past state retirement age, nor exceed the length of your existing mortgage.

How long has your mortgage got left?

sourcrates

IVA companies have started selling loans to end arrangements now.

I `m not a fan of this.

I don't believe you have to take this loan, but to be sure, i would give National Debtline a quick call and run the situation past them.

rugiada74

I don't retire for another 23 years, hence the 23 years long. My mortgage has about 17 years left.
I spoke to the mortgage broker again today and they seem to want to rush me into making a decision despite the fact i still have 9 months till the end of my normal 5 years, which makes me suspicious.
I intend to seek advise from my current mortgage lender to see if they can help as an additional loan will after all affect my ability to replay them, I have also never missed a mortgage payment, so maybe then can help financially or at least offer advice.

IAmWales

If your current lender cannot help speak with a whole of market broker to see what they can suggest.

Your concerns about job loss and sickness are valid, and you should take out suitable insurance to cover yourself in case of difficulties.

sourcrates

rugiada74 wrote: »

I don't retire for another 23 years, hence the 23 years long. My mortgage has about 17 years left.
I spoke to the mortgage broker again today and they seem to want to rush me into making a decision despite the fact i still have 9 months till the end of my normal 5 years, which makes me suspicious.
I intend to seek advise from my current mortgage lender to see if they can help as an additional loan will after all affect my ability to replay them, I have also never missed a mortgage payment, so maybe then can help financially or at least offer advice.

I strongly advise you to call National Debtline.

You should have three options.

Option (1) Take out this loan to end the arrangement,

Option (2) Equity release (remortgage),

Option (3) An extra years worth of repayments instead of option 1 & 2.

Consult with your IP and see if those 3 options are available to you, ask opinion of National Debtline as well.

Also check your IVA paperwork very carefully to see what that says your options in year 5 should be.